Healthcare organizations and other businesses use directional strategies to provide a framework for guiding operational decisions and activities. At its most basic level, a directional strategy helps the organization define what it stands for and what it hopes to achieve. On an operational level, directional strategies focus business efforts and resources on achieving growth, maintaining stability or implementing cutbacks, depending on the organization’s current needs and overall goals.

Basic Direction

An organization’s mission and vision are the most fundamental forms of directional strategy. A mission statement defines your business purpose and sets the overall tone for your strategic direction. For example, a private medical practice may exist to deliver specialty health services for profit, while a community hospital in an indigent area may exist as a nonprofit to provide broad access to medical care -- different missions that lead to different strategic approaches. A vision statement outlines what you hope to achieve as you work toward your mission and helps to focus your strategy toward reaching specific business goals.

Growth

A directional strategy aimed at growth is used when you want to move beyond current achievements associated with your product, performance, profit or other business measure. Healthcare organizations following a growth strategy may simply step up existing operations through increased investment or efficiencies to create business expansion. Other approaches include taking on additional activities previously handled by an external provider, such as pharmacy services or medical equipment maintenance, and diversifying your services into new sectors, such as consumer health publishing or nutritional supplements.

Stability

A directional strategy focused on stability strives to maintain the status quo in your business operations and outcomes. The low-risk, moderate-reward strategy requires no alterations to your existing practices. It is most appropriate for organizations that operate within a reliable market and bring in consistent returns on investment, such as an established medical imaging center or pathology laboratory. The approach also may be useful as an interim strategy for businesses seeking to control growth or wait out a temporary change in the market.

Retrenchment

Retrenchment is a directional strategy designed to help faltering companies improve poor performance. A retrenchment approach typically involves reducing operational costs and capacity through downsizing personnel and products, divesting underperforming business units and markets and outsourcing critical business functions, such as patient billing or phlebotomy services. Essentially, retrenchment strategy is a turnaround tactic to help you regain organizational strength and financial stability by scaling back in weak areas and focusing on the parts of your business that support competitive advantage and profit.

About the Author

Shari Parsons Miller has been a business writer since 1992. Her work has appeared in “Business Innovators-Internet & Computer Technology,” “Dallas Business Journal” and “Encyclopedia of Small Business.” Parsons Miller holds a Master of Arts in journalism from Cardiff University, Wales, U.K.